San Juan Ridge Mine

Introduction

San Juan Mining Corp., a wholly owned subsidiary of Shasta Gold Corp. acquired 100% of the San Juan Ridge Mine in 2011. The San Juan Ridge Mine is located 7 air miles (18.5 road miles) outside of Grass Valley in Nevada County, California. Access to the mine is on county paved roads.. According to a feasibility study by Pincock Allen and Holt in 1990 the mine contained approximately 257,000 ounces of mineable gold. A new engineering study was completed by San Juan Mining Corp in 2011 and is currently undergoing outside technical review by Pincock, Allen and Holt. This study will update mining cost to 2011 and include the use of a continuous mechanical miner to reduce cost and increase efficiency. The new study contemplates production of 23,000 ounces per year for 10 years. There was approximately 18,000 ounces produced in the mid 1990’s from the mine.

One aspect which distinguishes the proposed project from other gold mines is the gold recovery process. Gold from the San Juan project will be recovered by the same process as is used in sand and gravel operations; no toxic materials, such as cyanide or mercury, are used in the recovery process, only water and gravity.

Background

The San Juan Ridge Mine is an underground gold deposit that was permitted and operated in the mid 1990s. Prior to the issuance of the Operating Permits there was extensive Environmental Monitoring resulting in a full Environmental Impact Report and Reclamation Plan. San Juan Mining Corporation’s goal is to utilize current advancements in technology, equipment, and computer modeling to reopen the San Juan Ridge Mine in a manner which will mitigate environmental impacts, promote a safe working atmosphere, and increase the efficiency of the operation.

An underground room and pillar extraction method was utilized to extract gold bearing gravel. Mined gravel was processed by utilizing a method known as ‘scrubbing’ to liberate the free gold particles, where water and gravity solely was used in the gold recovery process. The process water is recycled continuously. This process is identical to the sand and gravel productions currently operating in and around Nevada County. The final stage of gold recovery included the production of gold bars.

Mine infrastructure built by the previous operator remains on-site and includes: underground tunnels, buildings, electrical utility services and access roads. Utilization of the existing infrastructure will greatly reduce the amount of surface preparation and disruption required to re-establish underground mining operations. Due to the San Juan Ridge Mine operating during the 1990’s, a wealth of knowledge regarding specific geological, hydrogeological and environmental issues has been, and continues to be, obtained to further define appropriate mining methods, and minimize project impacts.
h2>Rehabilitation of the San Juan Ridge Mine

Mining the San Juan Ridge Deposit

San Juan Mining Corporation will utilize a combination of mechanical excavation (continuous miner) and drill/blast mining techniques. In order to reduce the potential of encountering subsurface vertical fissures, and any associated pressurized water zones, a horizontal exploratory drilling program will be implemented in advance of proposed mining operations to identify any pressurized water zones, and, if encountered, allow the exploratory holes to be sealed while in a controlled environment. Site hydro geologic potential issues and proposed remedial actions are further described in the Water, Subsurface Section.

Shop Structure (click image to enlarge)

Mined rock will be transported to a subsurface processing facility where it will be classified. Initially classifying ore underground will reduce the quantity of material that must be hauled to the surface.Gravel less than 1/4-inch in size will be pumped to the surface for gold recovery. Again, only water and gravity will be used in the gold recovery system. Concrete will be mixed with the oversized mined rock (greater than 1/4-inch in size) to form a cemented backfill which will be placed into previously excavated areas to increase the strength of the mined openings. Gravel pumped to the surface will be placed in approved fills and reclaimed after the gold is recovered.

Anticipated Production Schedule

The production rate of the San Juan Ridge Mine will be 1,000 bank cubic yards per day (1 BCY=1.5 Tons). The mine will operate 7 days per week and 24 hours per day. At the planned production rate, the life expectancy of the San Juan Ridge Mine is 10 years. The mine will employ approximately 78 people initially and gradually increase to 90 people over the life of the project. Based on the prior operator’s experience, 75 percent of the employed workforce will be local residents, with the balance from other areas. With a median hourly wage of $27.53, the mine will generate approximately 4.5 million dollars of payroll per year. Further, re-opening the San Juan Ridge Mine will require an investment of $25 million dollars over the life of the project; approximately $18 million dollars will be spent on equipment not made locally, while the other $7 million dollars will be spent on labor, goods and services supplied from local vendors. After this investment is completed, the mine will generate in excess of $330,000 dollars annually in secured and un-secured property taxes.

Distribution of San Juan Ridge Mine property taxes

(click to enlarge)

The $330,000 in secured and unsecured property taxes will annually contribute $186,450 to Nevada County Schools, $33,100 to Nevada County cities, $64,085 to local districts (i.e. Fire Districts, Water Districts, etc.), and $46,365 to the General Fund, wherein funds are distributed for local services, such as emergency services, road maintenance and construction, etc.

Site Setting, Potential Project Impacts, and Proposed Mitigations

Concern for and protection of the environment will be a focus of the San Juan Mining Corporation throughout project initiation, operation, and closure. The San Juan Ridge Mine has some unique advantages which will help the operators develop and operate the mine while ensuring the protection of the environment. A brief discussion of these advantages is presented immediately below and is followed by site specific setting information, potential project impacts, and proposed mitigations strategies.

A tremendous amount of baseline environmental information has been, and continues to be, compiled and studied.

Regulatory bodies that are responsible for project permitting are familiar with the project and its history. Permits for the project have been granted in the past on two occasions; one for a surface mine that did not come to fruition, and one for an underground mine that did operate in the 1990s.

Basic Geology

The San Juan Ridge deposit is a cemented Paleo-placer gold deposit, which is located on a ridge above the present level of the South Yuba River. The gold bearing gravels were deposited during the early Tertiary period (60 million years ago) by a river system known as the Ancestral Yuba River. The channel of this river, and its tributaries, cut into the bedrock that contained gold bearing quartz veins. Erosion of these veins served as the primary source for gold in the gravels. Subsequent to the Tertiary period, new East/West drainages altered the course of the ancestral river system leaving gold rich gravel deposits in areas such as San Juan Ridge. From 1938 until the present, a total of 324 exploration holes were drilled in the property from 4” to 36” diameter. These drilling campaigns totaled approximately 88,000 lineal feet and defined a geologic resource containing approximately 506,000 ounces of gold on a portion of the property. Previous studies identified a high grade zone or “pay streak” which contains 2 million bank cubic yards of gravel grading .143 ounces of gold per yard. According to a feasibility study prepared in 1990 by Pincock, Allen & Holt, international resource consultants, the San Juan Ridge deposit contained a net mineable reserve of 257,707 ounces of gold of which 18,000 ounces were mined during the 1990’s operation.

Project Permitting

To meet the necessary requirements imposed by County, State and Federal agencies, a variety of permits will need to be obtained. These include a conditional use permit, National Pollutant Discharge Elimination System (water discharge) permits, Title 27 (waste storage) permit, air quality permitting, and, if necessary, a U.S. Army Corps of Engineers 404 (wetlands) permit and a State Water Resources Control Board 401 (water quality certification) permit. During the rehabilitation phase of the project, as well as during the main production phase, continuous water monitoring and testing will be performed to ensure water leaving the project site meets or is below all regulatory pollutant limits. Samples from both mine owned and neighboring wells will be collected, tested and reported. San Juan Mining Corp. will pay the full costs for a complete updated Environmental Impact Report and a New Reclamation Plan. Mine Operators are required to post the full estimated reclamation costs in cash prior to project start up. All costs incurred by Nevada County in processing the new permits are paid by the applicant, including staff time.

During the mine rehabilitation phase of the project, as well as during the years of mine production, it will be necessary to pump, treat and discharge water from the existing underground tunnels. Water will be collected underground and pumped to the surface. The discharge water will flow via pipeline to one of several settling ponds currently located on the property. Water deposited into the initial settling pond will then flow through a series of additional settling ponds to further settle out any solids. Oil and grease absorbent booms will be employed into the settling ponds to remove any hydrocarbons. Water from the last settling pond will be tested for metals and particulates to ensure the water is in compliance with all local, State and Federal regulations. If required to meet water quality objectives, an active treatment system will be utilized to remove hydrocarbons, particulates, metals, and any other pollutants. Once testing demonstrates the water quality objectives are being met, water will be discharged into the Shady or Spring Creek drainages via infiltration ponds.

Subsurface

San Juan Mining Corporation is aware of, and acknowledges, the fact that hydro geologic issues did occur during the previous operation of the San Juan Ridge Mine. During the former operation, mining activities unexpectedly excavated a ground fissure connecting the sub-bedrock strata to the bottom of the gravel zone in the mine horizon. This fissure also created a connection with a confined aquifer and the mine workings, releasing high pressure water into the underground excavation. The connection fissure that was excavated was not identified by the various hydrology experts who studied the property. The fissure was oriented vertically, which prevented its detection despite hundreds of drill holes. To prevent such an event from reoccurring, San Juan Mining Corporation will implement a horizontal exploratory drilling program to intersect any pressurized water zones on a small scale and in a controlled environment. Horizontal borings will be drilled underground from the working areas up to 300 feet into proposed mining sections to intersect vertical fissures. If pressurized water is encountered in one of the exploratory drill holes, it will be sealed and a plan of action devised to circumvent the water bearing zone well in advance of mining.

The release of the pressurized water did temporarily lower water levels in eleven private wells surrounding the property. The prior operator deepened all wells. The previous operator of the San Juan Ridge Mine and community representatives had developed a remedial water supply plan to provide a plan and funds to resolve any unforeseen water issues. A concrete bulkhead was installed and grouted into the excavation where the fissure was hit. New water wells were drilled or existing wells deepened for several neighboring residents who were impacted by the event. Water levels were monitored in these wells for two years after the underground fissure was sealed, monitoring data verified the well water levels were stable. A comprehensive remedial action plan will again be in place prior to re-opening the mine to protect neighboring wells.

San Juan Mining Corporation recognizes the fact that the San Juan Ridge Mine is surrounded by a number of residences, and as such, minimizing noise creation will be an important part of mine operation. The Nevada County General Plan identifies noise standards, which will be specified in the project’s use permit. In order to minimize noise creation and remain in compliance with the project use permit, a variety of mitigations will be implemented. Surface stationary equipment is not anticipated to be a significant noise producer; however, if necessary, engineering controls will be used to reduce the equipment’s noise creation. Noise intensive tasks necessary to the operation will be limited to daytime and non-weekend hours as much as possible. Similarly, noise generating mobile equipment will be operated during daytime and non-weekend hours to the degree practical. Noise monitoring and sampling will be done to ensure compliance with the appropriate permit regulations. The project will be designed to be as quiet as is technically practical.

Reclamation

Mine closure and reclamation actions will consist of plugging and sealing all openings, including ventilation boreholes, drill holes, cased utility holes, and mine entrance holes. Final surface reclamation will consist of the leveling and grading of tailings piles, settling ponds and other miscellaneous surface disturbances. These areas will be reclaimed with native sediments and planted with native grasses, forbs/shrubs, and trees to create a beneficial, natural land use following mine completion. Additional details regarding equipment removal, erosion and sediment control implementation, site zoning, site-specific reclamation and topographic recommendations, and site monitoring will be presented in the site’s reclamation plan.